Chester F. and Faye L. Sidell - Page 1

                                 T.C. Memo. 1999-301                                  

                               UNITED STATES TAX COURT                                

                    CHESTER F. AND FAYE L. SIDELL, Petitioners v.                     
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 10489-98.              Filed September 4, 1999.             

                         Respondent recharacterized the income                        
                    petitioner husband received from the rental of                    
                    property to his wholly owned C corporation                        
                    from passive to nonpassive, pursuant to the                       
                    attribution rule of sec. 1.469-4(a), Income                       
                    Tax Regs., and the so-called self-rented                          
                    property rule contained in sec. 1.469-2(f)(6),                    
                    Income Tax Regs. As a consequence of this                         
                    recharacterization, petitioners were able                         
                    neither to reduce such rental income by losses                    
                    from other rental properties nor to use                           
                    certain rehabilitation credits.                                   
                         1. Held: Pursuant to sec. 469(l),                            
                    I.R.C., the Secretary properly promulgated the                    
                    attribution and self-rented property rules.                       
                    The self-rented property rule (by virtue of                       
                    the attribution rule) is valid insofar as it                      
                    recharacterizes rental income received by a                       

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